FinMin offers banks a new plan
It combines the issue of devalued bonds with some cash, as haircut is likely to come to 50 pct
All eyes are on Brussels on Wednesday for the eurozone summit that could determine the future of the Greek debt and of the bloc in general,
with the likeliest scenario on Tuesday being for a 50 percent haircut, which Eurogroup president Jean-Claude Juncker said private investors will have to accept.
The plan on the table, according to sources in the Belgian capital, provides for the replacement of the existing
Greek bonds held by private investors with new ones with their value slashed in half, combined with the payment of cash. As a result the total amount of bonds held by private investors would go down from 205 billion to 102.5 billion euros.
According to this plan, which Finance Minister Evangelos Venizelos presented to the managers of Greek banks as the likeliest solution, for every 100 euros of Greek debt that private investors own, they will get 15 euros in cash and 35 euros in 30-year bonds with a 6 percent voucher, although the ratio of cash and bonds could change.
The payment of cash is the carrot for the private sector to participate in this plan, as unlike the plan presented last July, it does not include any guarantees for the new bonds by the European Financial Stability Facility (EFSF).
Venizelos also met with the head of the Institute of International Finance (IIF), Charles Dallara, on Tuesday, with government sources qualifying the meeting as “very positive,” while Dallara stated that there is no agreement on the level of the haircut.
Ahead of the crucial summit meeting on Wednesday, Austria’s Finance Minister Maria Fekter said on Tuesday that there is a limit to the funds the eurozone countries with a triple A credit rating can provide to Greece: “We’re committed to our contribution, but the measures can’t cost much more than that because we’ve got to look after our AAA ratings,” she stated.
Meanwhile, Venizelos reassured Parliament that there is no danger for social security funds from a debt haircut.
“Any solution for the long-term sustainability of public debt will be accompanied by measures which not only maintain but also visibly improve the current level of assets held by Greek social security funds,” Venizelos said in a statement.
“The government has planned and is decided to undertake all necessary measures to ensure its social and insurance policies.”
ekathimerini.com , Tuesday October 25, 2011 (23:05)
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Da leggere.